| LONDON, March 17
LONDON, March 17 Shares in Britain's five
largest housebuilders jumped on Monday, gaining over 930 million
pounds ($1.55 billion) in value, after the government
unexpectedly said it would extend a popular mortgage scheme
aimed at boosting construction of new homes.
Some industry executives said they were concerned that
leaving the "Help to Buy" scheme in place until the end of the
decade could create an unhealthy dependency on government aid.
Finance minister George Osborne said on Sunday the
government would extend a programme of providing equity loans to
buyers of newly built homes costing up to 600,000 pounds by four
years until 2020.
Coming in the run-up to the government's annual budget on
Wednesday, the announcement illustrates how the debate over
Britain's housing shortage has crept to the top of the political
agenda, with elections just over a year away.
James Pargeter, head of residential at Deloitte Real Estate,
said he was surprised by the length of the extension, saying
many in the industry had thought that it might be halted early
or tapered off.
"I guess things get a bit skewed when there's an election,"
Housebuilding stocks rose strongly on Monday, led by
Persimmon and Barratt Developments whose shares
climbed 7 percent and 5.4 percent respectively, adding to gains
of 40 percent over the past year for the sector.
Shares in the two together with Taylor Wimpey,
Berkeley Group Holdings and Bellway added about
930 million pounds in value on Monday, based on Reuters'
Stewart Baseley, executive chairman of the Home Builders
Federation, called on Britain's opposition Labour party to give
its backing to the scheme ahead of the May 2015 elections.
"We hope that other parties will be able to ensure that a
political consensus to continue the scheme is in place before
The opposition Labour party, which has pledged to get
200,000 homes built a year by 2020, said Britain was
experiencing the lowest levels of house building in peace time
since the 1920s and that an alternative, "Help to Build" policy
The government launched the two-part Help to Buy scheme in
April last year in a bid to free up the mortgage market and spur
housebuilding, a move that it hoped would help ease Britain's
acute housing shortage.
Economists say Britain needs 250,000 new homes per year to
keep pace with population growth. Developers built 108,000 homes
in 2013, data from property consultancy Savills showed.
Apart from boosting sales rates and profits at housebuilders
Barratt and Taylor Wimpey, the scheme has been credited
for spurring construction. Construction started on more new
homes in England last year than at any point since 2007, data
showed last month.
The industry has previously called for more clarity on how
the scheme would end.
Knight Frank research analyst Grainne Gilmore said the
extension would give more confidence to firms considering big
projects, typically each involving 500-1,000 units.
"They take ages to get from field to planning to then
building the schemes out. Having that longer time period will be
welcomed by the housebuilders," she said.
Almost 15,000 equity loans have been handed out to aspiring
house buyers across England since April, Knight Frank data
showed. The scheme accounted for 1.8 percent of total
transactions across England from April to the end of January.
Osborne did not announce any changes to the second, more
controversial mortgage guarantee part of the scheme.
Some industry observers are worried about the implications
of long-term state help.
Pete Redfern, chief executive of housebuilder Taylor Wimpey,
had previously called for a clear exit plan for Help to Buy,
saying that no industry should depend on such support measures.
Roger Humber, strategic policy adviser to lobby group House
Builders Association, said he was increasingly worried about
dependency on Help to Buy. "They may be perfectly happy now but
will they be happy if you get a change of government, a much
more interventionist government?"
"An industry cannot prosper if it's built on government
guarantees," he said.